Earning a 10,0% annual interest over a two-year period through Volkswagen, without receiving any daily allowance or benefits from Volkswagen Bank.
Cashing in with High Yield: Equity-Linked Bonds and the Volkswagen Capital Gain
Thinking about making a savvy investment move? Look no further than equity-linked bonds, offering eye-popping interest rates of up to 10% for a whopping two years, all courtesy of Volkswagen! But don't get too excited just yet, because the key to this opportunity lies in understanding the mysteries of equity-linked bonds and the difference between high-yield investments and everyday savings.
The Volkswagen Equity-Linked Bond: A Game of Stocks, Not Cars
Equity-linked bonds may sound complex, but they're essentially a hybrid financial instrument that resembles both savings bonds and stocks. With an equity-linked bond, you don't actually purchase a Volkswagen share, but instead bet on the stock's performance while still receiving a guaranteed interest rate. Sounds too good to be true, right? Well, there are a few catches— lets delve deeper:
- If you're in the market for the Volkswagen equity-linked bond, you'll be dealing with HSBC (WKN HT286F). In essence, HSBC has crafted a product that hinges on the performance of the Volkswagen share, rather than the automaker or its bank.
- With this bond, you'll earn interest for up to two years, as long as Volkswagen doesn't file for bankruptcy. However, whether you recoup your initial investment depends on the fortunes of the VW share, and there are two possible scenarios:
a. If the share price is at or above €95 on the valuation day (January 15, 2027), you'll receive both the accrued interest and your capital in full.
b. If the share price plummets below €95, you'll still receive your interest but will also be paid any fractional parts of the conversion ratio, which could translate into further repayment[1].
Equity-Linked Bonds: A Step Up from Everyday Deposits (No Volkswagen Bank Ties)
Important reminder: Volkswagen and Volkswagen Bank have absolutely no part in the equity-linked bond, and the interest isn't even paid by the automaker. So, steer clear of any confusion there.
As with any higher-yield investment, there's more risk involved than with traditional deposit accounts, such as daily money or fixed-term deposits. This inherent risk translates to significantly higher interest rates— interest rates you won't find with daily money or even the Volkswagen Bank's fixed-term deposit offers. It's up to you to decide whether you're willing to take on the extra risk for those tantalizing returns[1].
Now, if you're not yet satisfied with the equity-linked bond and are still craving the best interest tips and exclusive stock recommendations, make sure to sign up for the BÖRSE ONLINE Outperformance Newsletter.
A Final Warning: Be Aware of the Risks
While the interest provides a cushion for potential losses up to a certain threshold, there's still a chance you'll lose money with the equity-linked bond. Remember, this is in stark contrast to the investment in daily money, which presents significantly less risk.
An Insightful Insight: Equity-linked bonds are ideal when investors expect a sideways trend in Volkswagen's share, yet still yearn for high returns. But proceed with caution— these complex instruments may require a thorough understanding to navigate their intricacies.
Most of the important details we've discussed here pertain to debt securities issued by Volkswagen or a special purpose vehicle. Keep in mind that the investor faces a significant capital loss risk, up to total loss, if the price of the underlying asset falls or the issuer declares bankruptcy. It's crucial to read through the offering documents, which include the final terms, base prospectus, and registration document, to better comprehend the potential risks and product conditions[1].
[1] Data source: BÖRSE ONLINE, Tradingview, HSBC[2] Additional resources: Investopedia, German Financial Services Supervisory Authority (BaFin)[3] Other notable hybrids issued by Volkswagen: Series 074008, Series 074013, Series 074316, Series 074319
- In the context of the Volkswagen equity-linked bond, the investment involves betting on the stock's performance while still receiving a guaranteed interest rate, making it a hybrid financial instrument that combines elements of both savings bonds and stocks.
- Although the interest isn't paid by Volkswagen, higher-yield investments like the equity-linked bond, compared to traditional deposit accounts such as daily money or fixed-term deposits, offer significantly higher rates of return; however, the risk involved is also greater.
